The recession that won’t end

Cyprus has become the fifth country in the eurozone to receive a bail-out. The news overshadowed the latest eurozone economic data. The composite eurozone PMI survey, which tracks both manufacturing and services, fell back to a five-month low in March, its second successive monthly decline. The eurozone Economic Sentiment indicator, covering business and consumer confidence, fell for the first time since October.

What the commentators said

The fuss over Cyprus has eclipsed "the other big crisis in Europe", as Economist.com's Free Exchange blog put it "the eurozone recession that just won't end". There hasn't been any growth in the single currency area since the autumn of 2011.

The bloc's output has shrunk by another 1.2% since then, following the 5.6% drop in 2008/2009. And now, after slowing for a few months, the rate of contraction seems to be quickening again, with much of the damage done before the jitters over Cyprus late this month. The figures "are not encouraging". The PMI shows Germany is struggling and "the French economy seems to be imploding".

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Officials "have found ways to put out fires at the last minute", said Brian Blackstone in The Wall Street Journal, but have made no progress on bolstering growth. For now, they "seem to be counting on a global economic upswing" to lift Europe off the rocks in the next few months. There's a long way to go: hiring only really rises in earnest when growth reaches 2%.

It's hard to see where growth will come from. Austerity has undermined growth and reforms to improve long-term competitiveness in the south have stalled. A fiscal or banking union, which would bolster confidence by defusing crises, remains a long way off. At the same time, "the sort of cathartic crisis that might occasion change" is precluded by the European Central Bank's "willingness to pump unlimited amounts of cash into Europe's enfeebled banks".

The lousy economic backdrop makes the eventual break-up of the euro all the more likely, said Albert Edwards of Socit Gnrale. It threatens to worsen the deep recessions in the south and lead to "increasingly fractious relations between debtor and creditor nations". Debtors will keep missing deficit targets and creditors will have to keep forking out. The euro's days are numbered.